Author: Gabriel Stürmer

Cupcake Entertainment is a Brazilian/Estonian fast growing mobile and Facebook games developer and publisher. We want to help people exercising their brains while having fun and our goal is to be the #1 casual brain puzzle games company in the world and all of our games, and everything we do in the company, is aimed at that specific goal.

Our target audience is women over 35 years old. Most of them are in the US, but also in UK, CA, DE and FR. Not by accident as Cupcake and our games were built with that audience in mind. The Change the Game research by Google Play found out that 65% of women aged 10 to 65 in the US play mobile games and 49 per cent of mobile gamers are women.

Cupcake was founded in 2012, initially doing outsourcing and advergames. In 2012 and 2013 we launched our first two games, which failed commercially but were an important learning in the making of Letters of Gold, which is currently our biggest game and is the one the led us to only work on our own games. Letters of Gold is a word search puzzle, a mix of the traditional word search games with puzzles like the ones you find in Candy Crush.

In 2014 we were accepted into Startup Chile, which is the biggest startup accelerator in Latin America. It helped us improve the business side of the company and we started seeing some early revenue growth in early 2015.

After that we got into GameFounders, which is a Estonian startup accelerator for game companies in a batch they ran in Malaysia. GameFounders was crucial for building our network in the industry and improving our games and by the end of the program we were growing really fast, about 45% a month, a growth rate we sustained for 18 months!

The networking we gained from GameFounders, as well as sustained growth rate, led to a recognition in the games industry which resulted in a $1M investment by Thailand’s Playlab in 2017. Nowadays Cupcake is one of the biggest games companies in Brazil and we are building the structure for further growth.

During GameFounders we established our Estonian Oü company and became e-residents. Being e-residents became really important for us because of a cultural trait of Cupcake: we are all remote. There’s not a Cupcake office anywhere and being able to run the company from anywhere in the world is really important to us.

Our remote team is scattered all over Brazil, and one guy is in Germany. We communicate on a daily basis using video and all of our process were designed to work remotely, even hiring. I won’t get into the pros and cons of remote working in this article, João will write another article detailing how we work remotely, but it is something that works really well for Cupcake and we wish to continue.

We already run many services from the Estonian company and our goal is to actually set foot in Estonia, move the team there if they wish to (many do) and hire people in Estonia, but still work remote. After all, that’s the whole point of e-residence, to allow people to run their companies from all over the world.

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Every company should aim at building a strong community. It is key for keeping advanced players engaged and aware of updates in the game, especially new content they can enjoy. But a very important and unspoken reason for building a community is being able to get players to your new games. And here’s where one of our most important strategic decisions comes into play: all of our games are made for the same players, with the same tastes. All casual brain puzzle games, a genre we aspire to get to be the #1 in the world. Because of that, we decrease our acquisition costs by moving players across all of our games, which they are very likely to enjoy, increasing retention. Building a strong community with people who enjoy casual brain puzzle games is a huge advantage.

If you think about someone playing games, it’s unlikely you are going to think about our players. They are mostly women over 35 years old, not by accident. Cupcake Entertainment and our games were built with that audience in mind. Not that people are not used to seeing women playing games, the Change the Game research by Google Play found out that 65% of women aged 10-65 in the US play mobile games and 49% of mobile gamers are women.

Managing such a community requires a particular set of skills, especially clear and precise communication, as well as patience. They are usually very polite, much more than other groups of gamers I’m aware of, and appreciate having someone listen to their problems with the games, to which they frequently say “No one has ever responded to my complaints in other games”. For most of them, taking a screenshot is considered an advanced skill. Bug fixes require a lot of figuring out between the team to pinpoint specific questions to ask the players, so that we can get the best information back. The whole team is aware of our concern with the players and is used to prioritizing their problems. That’s how we get the fame of being the most responsive company out there, which makes the players comfortable playing and spending in our games.

Player feedback about our community management

Our communities are all based on Facebook Groups because that is where our players hang out. Not on forums, not reddit, but Facebook Groups. We incentivize the players to join our Facebook Groups by offering free gold they can redeem once they join. But the groups go way beyond free gold, with players discussing the games, making new friends to trade gifts in the games, sharing their strategy for specific levels, their progress and also reporting bugs. Even churned players are still part of our community, interacting with other players and eventually going back into each of the games or trying new ones.

Having such a strong and engaged community has a direct impact in the company performance, as we can easily get players back to the games to engage with new content or try new games that we launch (remember that all of our games are made for the same demographic). Our player community is certainly one of the key pillars in our strategy to be the #1 casual brain puzzle company in the world.

Particularly in casual games, where socializing is a big part of why people play, a strong community is a differentiation factor that will make people stick around for much longer. The goal of a well run community is to be a place where players feel comfortable interacting with each other, sharing what they like and what they don’t like about the game, and knowing that they are being heard by those who are in charge of taking care of the games they love.

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2017 is gone? WOW, that was quick. Still, we managed to accomplish so much over the past 12 months and are very proud with the results.

Revenue grew 3.5x compared to 2016, 5x more installs, 2x average salaries and also doubled team size. We also managed to grow our Facebook games, to set a bigger footprint in mobile with the launch of Letters of Gold and the soft launch of a new brain puzzle game!

A big thank you to our lovely players, partners, friends and especially team members who made our 2017 a huge success.

For 2018, we are planning to go even further and are looking for the best talent in the industry. Are you up for the challenge? Apply at https://www.cupcakese.com/jobs

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One thing is very clear to us at Cupcake Entertainment: who our players are. Very unlikely to be you, reading about games on the internet, but actually your mom and grandma. All of Cupcake’s games are made for them and our latest mobile game, Letters of Gold, is no exception.

The word search puzzle game is a mix of the traditional word search games and puzzles. In Letters of Gold you search for words and use them to beat puzzles on the board, like break boxes or make more points than the evil owls. The game is being launched with an impressive number of 1000 levels, every single one of them with a different challenge to test the player’s brain power.

Launched on Facebook in 2013, we have been working on the game which is a whole lot different than it was at the beginning, when it only had 20 levels. Better visuals, improved tutorials and user experience. Even the letter distribution system has changed so that the players can make bigger words and have more fun.

The ever growing community is very engaged, with hundreds of thousands of very active players. They have made Letters of Gold one of the most successful word games on Facebook and our goal is to replicate the same success on mobile.

After 3 months of soft launch in Australia, New Zealand, Portugal, Spain and the Philippines, as well as almost 4 years on Facebook, Letters of Gold is finally available globally today, for iOS and Android devices.

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We are delighted to announce a one million dollars deal with southeast asian Playlab. We have been in talks since we met in GameFounders in 2015, where the Cupcake team was mentored by Jakob Lykkegaard Pedersen, Playlab’s CEO.

Cupcake has shown impressive growth of 45% a month over the past 18 months, including an impressive 3x growth in revenue since last September by reinvesting its own money in its 3 games, Letters of Gold, Words of Gold and Numbers of Gold.

Playlab’s financing arm is now stepping in to finance user acquisition, to grow the games even further. “We have been following the team closely due to their passion for the community and finally found a good way to help.” Said Jakob Lykkegaard from Playlab.

“We have a pile of credit cards and use all of them to invest more and more in user acquisition. We are aggressive and it pays off.” said Gabriel Stürmer, Cupcake’s CMO, in his talk about UA in PG Connects London 2017.

“Cupcake Entertainment’s goal is to be the #1 casual brain puzzle company in the world and the biggest games company in Brazil. This deal will get us there faster” said João Vítor de Souza, CEO.

Over the past couple of days we interviewed a variety of people for a Full Stack Developer position. Dozens of people have applied and some went to the first interview. They all had potential according to their resumes, but many let us down due to basic stuff.

I’ve decided to put together a list of basic things you should do before applying and going to an interview in a games company in hopes that future candidates will go as far as looking at this blog post or that it will help you get the job you want in other companies. I’ll use Cupcake in examples, but I’m certain this will help anywhere else.

If you are interviewing with us and read this post, make sure you mention it as you will get extra points.

Here you go:

Read the job description
We’ve had an artist who’s aspiration is to be an artist applying for a programmer’s position for which he doesn’t have any experience.

Have a decent CV
No pictures, it’s 2016. Decent and well structured information. Careful with typos. Tailor your resume for each position you apply with information you think is the most relevant.

Research the company
Read the news, learn about what they do and try to gather any information available about the company. Look at the website, social media.

Make sure there is a cultural fit
The Cupcake Manifesto contains everything you need to know about who we are and our aspirations. We are bold and aspire to be a successful multi-billion dollars company. We do casual and work with women over 35 years old.
If you only want to make hardcore console games, you are nor for us. If you only want to work on a small and cool indie studio making pixel art games, we are not good for you either. There must be a synergy.

Google the people emailing you
You’ll be less nervous if you know more about the people interviewing you (“He likes The Walking Dead and so do I!”).

PLAY THE GAMES
Seriously people. This is by far the most important one.
Games are the essence of what a games company does. I play all the games of people who apply to work at Cupcake.

Finding good people is the most important thing when growing a company and we are doing exactly that right now. Also incredibly hard.

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Last week João briefly discussed some acronyms that are common among the #gamedev community. Now I’ll dive deeper into two of them: CPI and LTV. These two have a direct impact on the ability games have to make money which is deeply important for any game company.

Let’s start with CPI, or Cost Per Install. It basically is how much you spend to bring one user to your game. Let’s say you pay the average $1 to bring one user directly from your advertisement, so if you spend $10 you will get 10 users. If that one user brings another friend to play your game, you spent $1 for two players, or $0,50 per player. That’s your eCPI (effective CPI), which is actually the best way to look at UA (user acquisition) costs because it considers organic users and virality, the ones you don’t pay for.

LTV means Life Time Value, the average money you make in your game for each user during the time they play it. Some people spend thousands of dollars, some people won’t spend a dime. Some people will play for 800 days straight, some people will abandon on the first day. Usually 20% of the users will bring 80% of your revenue. There are many ways to calculate LTV, but we use LTV = Average Revenue Per Daily Active User x Average Days Played.

In every business, if you can make more money selling your products than you spend on bringing new customers, you have good ROI (Return On Investment). If you get to make a game with a higher LTV than CPI (or eCPI), it means that you can invest money in user acquisition and make more money on top of it, fuelling a money making infinite loop, you made it.

Getting to this level requires a lot of work and there are only a few companies that get to that point at scale, usually the ones with games in the Top Grossing charts. We at Cupcake have a higher LTV than CPI. See you at the Top Grossing!

However, I’ve noticed that many game developers lack focus on a target audience for their business. First game is a Mario clone for males under 25 yo (Marcio Broz); second is a puzzle for women over 35; third is a shooter for males over 25; and forth is an adventure for males over 25 who don’t shooters. That’s a problem! Why?

To clarify the issue, let me talk about the benefits of working with a specific target audience:

Creates a community of people who play all of your games;

Reusing knowledge acquired in previous games;

Cross promotion among your games, lowering UA costs;

Keeps high quality players circling around your games and spending in all of them (71% of Installs and 78% of Numbers of Gold’s revenue comes from our other two games);

People playing all of your games makes revenue grow for all of them;

Increases retention of your games.

The three larger mobile games companies all have very specific target audiences. King is casual, Supercell is midcore and Machine Zone is Hardcore. Cupcake is focused on Casual Brain Puzzles, where all of our current and future games fit. Not as casual as King, as all of the games of Golddemand higher brain effort than it’s necessary to shuffle candy.

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This article will give you a high level strategy about how games make money, including ours. I’ll touch base in some key aspects that impact your game’s ability to make money.

Defining your demographic:No game can make money without users. Also, no game can make money without the RIGHT users, so get to know your target demographics upfront as it will impact many key points of your gameplay and art. Are they casual or hardcore players? Male or female? Age?

Acquiring users:Now you must let them know about your game. There are several ways to acquire users, both paid and free. Advertisement, app store organic and featuring, cross promotion and PR (not very effective) through blogs and youtubers. Free users are free, which is good, but high quality users are more escarce. Games that depend on purchases also depend on high quality users, usually from ads.

Monetizing:The good $tuff. There are three major ways to monetize nowadays. Ads, in app purchases and premium. Crossy Road developer Hipster Whale made $10M from ads in 90 days, which is a lot of money. Or is it? When you compare to Supercell’s whopping $6.3M a day, it doesn’t look that way. And that’s before Clash Royale.

It is clear that IAPs are the way to make big money in mobile, but they are indeed more difficult than making money from ads, as IAPs need to make sense in the overall game design and offer true value to the user. Premium model is dying in mobile, as you can see in the app store’s top grossing charts. Minecraft is the only game to show up in the top grossing charts and it is only 43rd. It is still a thing in PC and console for now.

What about Cupcake?Our demographic is women over 35 years old who like to play games that keep their brains active. Most of our users come from organic, but the top users come from profitable Facebook Ads campaigns. Just like Supercell, we make money from In App Purchases in a model that has proven to be successful, very similar to Candy Crush.